What is Governance?
The complexity of governance is difficult to capture in a simple definition.
The need for governance exists anytime a group of people come together to accomplish an end. Though the governance literature proposes several definitions, most rest on three dimensions: authority, decision-making and accountability. At the Institute, our working definition of governance reflects these dimensions:
Governance determines who has power, who makes decisions, how other players make their voice heard and how account is rendered.
Ultimately, the application of good governance serves to realize organizational and societal goals.
The following examples help our understanding of each of the three dimensions of governance. Where a group is too large to efficiently make all necessary decisions, it creates an entity to facilitate the process. Group members delegate a large portion of the decision-making responsibility to this entity. In voluntary sector organizations this entity is the board of directors. In a public sector context this may be a board of directors, a committee or a project management team. One simple definition of governance is “the art of steering societies and organizations.” Governance is about the more strategic aspects of steering, making the larger decisions about both direction and roles.
Some observers criticize this definition as being too simple. Steering suggests that governance is a straightforward process, akin to a steersman in a boat. These critics assert that governance is neither simple nor neat — by nature it may be messy, tentative, unpredictable and fluid. Governance is complicated by the fact that it involves multiple actors, not a single helmsman.
These multiple actors are the organization’s stakeholders. They articulate their interests, influence how decisions are made, who the decision-makers are and what decisions are taken.
Decision-makers must absorb this input into the decision-making process. Decision-makers are then accountable to those same stakeholders for the organization’s output and the process of producing it.
Governance is also a highly contextual concept. The process and practices that will apply will vary significantly given the environment in which they are applied. Governance in the public sector needs to take into account legal and constitutional accountability and responsibilities. In the non-governmental sector, representing stakeholder interests may be a determining factor in the governance to be applied. Even within these sectors, size, shape, form and function will vary greatly from one organization to the next. When working in the field of governance, one operates in an area where one size does not fit all.
Five Principles of Good Governance
Defining the principles of good governance is difficult and controversial. The United Nations Development Program (UNDP) enunciates a set of principles that, with slight variations, appear in much of the literature. There is strong evidence that these UNDP–based principles have a claim to universal recognition. In grouping them under five broad themes, the Institute on Governance recognizes that these principles often overlap or are conflicting at some point, that they play out in practice according to the actual social context, that applying such principles is complex and that they are all about not only the results of power but how well it is exercised.
||The UNDP Principles and related UNDP text on which they are based
|Legitimacy and Voice
||Participation – all men and women should have a voice in decision-making, either directly or through legitimate intermediate institutions that represent their intention. Such broad participation is built on freedom of association and speech, as well as capacities to participate constructively.
Consensus orientation – good governance mediates differing interests to reach a broad consensus on what is in the best interest of the group and, where possible, on policies and procedures.
||Strategic vision – leaders and the public have a broad and long-term perspective on good governance and human development, along with a sense of what is needed for such development. There is also an understanding of the historical, cultural and social complexities in which that perspective is grounded.
||Responsiveness – institutions and processes try to serve all stakeholders.
Effectiveness and efficiency – processes and institutions produce results that meet needs while making the best use of resources.
||Accountability – decision-makers in government, the private sector and civil society organizations are accountable to the public, as well as to institutional stakeholders. This accountability differs depending on the organizations and whether the decision is internal or external.
Transparency – transparency is built on the free flow of information. Processes, institutions and information are directly accessible to those concerned with them, and enough information is provided to understand and monitor them.
||Equity – all men and women have opportunities to improve or maintain their well- being.
Rule of Law – legal frameworks should be fair and enforced impartially, particularly the laws on human rights.